Case # 1 TOPIC: Article 1191 FACTS:

AYALA INC VS. RAY BURTON CORP GR No. 163075, January 23, 2006

On December 1995, Ayala Inc. and Ray Burton Corp. Entered into a contract denominated as a Contract to Sell, with a Side Agreement of even date. In these contracts, petitioner agreed to sell to respondent a parcel of land. Respondent paid thirty (30%) down payment and the quarterly amortization. However respondent notified petitioner in writing that it will no longer continue to pay due to the adverse effects of the economic crisis to its business. Respondent then asked for the immediate cancellation of the contract and for a refund of its previous payments as provided in the contract. Petitioner refused to cancel the contract to sell. Instead, it filed a complaint for specific performance against respondent, demanding from the latter the payment of the remaining unpaid quarterly installments inclusive of interest and penalties. ISSUE: Whether respondents non-payment of the balance of the purchase price gave rise to a cause of action on the part of petitioner to demand full payment of the purchase price HELD: Before the remedy of specific performance may be availed of, there must be a breach of the contract. Under a contract to sell, the title of the thing to be sold is retained by the seller until the purchaser makes full payment of the agreed purchase price. The non-fulfillment by the respondent of his obligation to pay, which is a suspense condition to the obligation of the petitioners to sell and deliver the title to the property, rendered the contract to sell ineffective and without force and effect; failure of which is not really a breach, serious or otherwise, but an event that prevents the obligation of the petitioners to convey title from arising, in accordance with Article 1184 of the Civil Code. Here, the provisions of the contract to sell categorically indicate that respondents default in the payment of the purchase price is considered merely as an event, the happening of which gives rise to the respective obligations of the parties mentioned therein.

Case # 2

CANNU vs. GALANG G.R. No. 139523 May 26, 2005

TOPIC: Article 1191 Facts: Respondent spouses Galang agreed to sell their house and lot subject to mortgage with the National Home Mortgage Finance Corp (NHMFC). Petitioner Leticia Cannu agreed to buy the property for 120K & to assume the mortgage obligations with the NHMFC. A deed of sale & assumption of mortgage was executed & petitioners immediately took possession & occupied the house & lot. Despite requests from Fernandina Galang to pay the balance or in the alternative to vacate the property in question, petitioners refused to do so. Because the Cannus, failed to fully comply with their obligations, respondent Galang, paid P233K as full payment of her remaining mortgage loan with NHMFC. 8 yrs. had already elapsed and petitioners have not yet complied with the obligation. The RTC ordered the deed of sale with Assumption of Mortgage as rescinded as well as ordered mutual restitution. ISSUE: WON the breach of obligation is substantial WON rescission is subsidiary HELD: Breach considered being substantial. Cannu failed to comply with her obligation to pay the monthly amortizations due on the mortgage. Also, the tender made by Cannu only after the filing of this case cannot be considered as an effective mode of payment. Resolution of a party to an obligation under Article 1191 is predicated on a breach of faith by the other party that violates the reciprocity between them. In the case at bar, Cannus failure to pay the remaining balances of 45K to be substantial. Rescission will not be permitted for a slight or casual breach of the contract. Rescission may be had only for such breaches that are substantial and fundamental as to defeat the object of the parties in making the agreement. The rescission in this case is not predicated on injury to economic interests of the party plaintiff but on the breach of faith by the defendant, that violates the reciprocity between the parties. It is not a subsidiary action. The rescission in 1191 is a principal action retaliatory in character; it being unjust that a party be held bound to fulfill his promises when the other violates his.

Case #3 TOPIC: Article 1191 and 1381 FACTS:

LALICON vs. NATIONAL HOUSING AUTHORITY [G.R. No. 185440. July 13, 2011]

On1980 the National Housing Authority (NHA) executed a Deed of Sale with Mortgage over a Quezon City lot in favor of the spouses Isidro and Flaviana Alfaro. It was provided in the deed of sale that the Alfaros could sell the land within five years from the date of its release from mortgage without NHAs prior written consent. Nine years later Alfaros sold the land to their son Victor Alfaro, who had a house built on the property and paid for the amortizations. On March 21,1991, the NHA released the mortgage. After four and a half years since the mortgaged was released Victor registered the sale of land in his favor, resulting in the cancellation of his parents title. Afterward, Victor sold the property to Chua, one of the mortgagees, Moreover, a year later the NHA instituted a case before the Quezon City Regional Trial Court (RTC) for the annulment of the NHAs 1980 sale of the land to their son Victor and the subsequent sale of Victor to Chuawas a violation of NHA rules and regulations

ISSUES: Whether or not the NHAs right to rescind has prescribed; and HELD: An action for rescission can proceed from either Article 1191 or Article 1381. It has been held that Article 1191 speaks of rescission in reciprocal obligations within the context of Article 1124 of the Old Civil Code which uses the term "resolution." Resolution applies only to reciprocal obligations; such that a breach on the part of one party constitutes an implied resolutely condition which entitles the other party to rescission. Resolution grants the injured party the option to pursue, as principal actions, either a rescission or specific performance of the obligation, with payment of damages in either case. Recession under Article 1381, on the other hand, is subsidiary action, not based on a party's breach of obligation. The four-year prescriptive period provided in Article 1389 applies to rescissions under Article 1381. Here, the NHA sought annulment of the Alfaros' sale to Victor because they violated the five-year restriction against such sale provided in their contract. The NHA's right of action accrued when it learned of the Alfaros' forbidden sale of the property to Victor. Since the NHA filed its action for annulment of sale on April 10, 1998, it did so well within the 10-year prescriptive period.

Case #4 TOPIC: Article 2221 FACTS:

CATHAY PACIFIC AIRWAYS VS. VAZQUEZ 399 SCRA 207 (2003)

In respondents return flight to Manila from Hongkong, they were deprived of their original seats in Business Class with their companions because of overbooking. Since respondents were privileged members, their seats were upgraded to First Class. Respondents refused but eventually persuaded to accept it. Upon return to Manila, they demanded that they be indemnified in the amount of P1million for the humiliation and embarrassment caused by its employees. Petitioners Country Manager failed to respond. Respondents instituted action for damages. ISSUES: Whether or not the petitioners (1) breached the contract of carriage, (2) acted with fraud and (3) were liable for damages. RULING: (1) YES. Although respondents have the priority of upgrading their seats, such priority may be waived, as what respondents did. It should have not been imposed on them over their vehement objection. (2) NO. There was no evident bad faith or fraud in upgrade of seat neither on overbooking of flight as it is within 10% tolerance. Ms. Chiu might have failed to consider the remedy of offering the First Class seats to other passengers. But, we find no bad faith in her failure to do so, even if that amounted to an exercise of poor judgment. Neither was the transfer of the Vazquezes effected for some evil or devious purpose (3) YES. Nominal damages (Art. 2221, NCC) were awarded in the amount of P5,000.00.

Case #5

Polo Pantaleon vs. American Express International Inc G.R. No. 174269May 8, 2009 TOPIC: Articles 1170 and 2217 FACTS: Polo Pantaleon went on a tour with his family in Europe. While they were in Amsterdam, Mrs. Pantaleon decided to purchase some diamond pieces. Mr. Pantaleon used his AMEX credit card to pay for the said diamonds. It took AMEX a total of 78minutes to approve the purchase and to transmit the approval to the jewelry store. The travel companions of the Pantaleon family got irritated because they had to cancel the city tour due to the delay in the purchase of the diamonds. The same thing also happened when the family was in the US. ISSUE: Whether or not AMEX has committed a breach of its obligation to Pantaleon, and were liable for damages RULING: Yes, AMEX committed a breach of its obligation. It is the obligation of the respondent, as a debtor/ obligor, to act on the purchase of the petitioner with timely dispatch. The culpable failure of the respondent herein is not the failure to timely act on the same but the failure to promptly informed petitioner the reason for the delay, and duly advised him that resolving the same could take some time.Yes. The reason why Pantaleon is entitled to damages is not simply because AmEx incurred delay, but because the delay, for which culpability lies under Article 1170, led to the particular injuries under Article 2217 of the Civil Code for which moral damages are remunerative.

Case #6 TOPIC: Article 1169 FACTS:

BARZAGA vs. COURT OF APPEALS GR NO. 115129

Petitoners wife was suffering from a disease and is almost dying. The wife requested that upon her death, she wanted to be laid on her niche before December 25 since Christmas was fast approaching and she dont want to burden her family with the wake. After her death, petitioner bought materials from private respndent for the construction of the niche of his late wife. Private respondent however failed to deliver said materials on time despite repeated follow up. The niche was then completed on the afternon of the 27th day of December, and his wife was finally laid to rest. ISSUE: WON theres a delay in the performance of the private respondents obligation? HELD: Yes since respondent was negligent to his obligation and incured delay in the performace of his contractual obligatin, petitioner is entitled to be indemnified for the damage he suffered as a consequence of the delay or contractual breach. Non perfrmance reciprocal obligation, as in contarct of purchase and sale, petitioner had already done his part, in which he already paid the materials needed. It was now the obligation of th respondent to deliver the god on time otherwise delay will attach.

Case #7 TOPIC: Article 1169 FACTS:

LORENZO SHIPPING CRPORATION vs BJ MARTHEL GR NO. 145483

Petitioner is a domestic corporaton engaged in coastwise shipping. It used to own cargo vessel m/v Badiangas espress. On the other hand, Respond, is a business enty engaged in trading marketing and selling of varios industrial commodities. It is also on importer and distributor of different brands of engines. From 1987 onwards, respondent supplied petitioner with spare parts for the latters marine engine in 1989, petitioner asked respondent for quotation for various machine parts, taking action with the request, repondent furnished petitioner with formal quotatin and it was stated that delivey is within two months from receipt of the firm order. ISSUE: WON the period of time which lapsed in the sontract causing the delay in delivery of the cylinder liner is essential in the decision of the case at bar? HELD: The court held respondent bound to the quotation it submitted to petitioner particularly wuith respect to the terms of payment and delivery of cylinder liners. It also declared that respondent agreed to the cancellation of the contrcat sale when it returned the post dated checks.

Case #8

TOPIC: Article 1170 FACTS: Johnny Ong tried to acquire a townhome from the defendants. In the contract to sell, defendants agreed to sell the said townhouse to respondent for P3.4 Million. The down payment was P1 Million while the balance of P2.4 Million was to be paid in full upon completion, delivery and acceptance of the townhouse. Defendants agreed to complete and convey to respondent the unit w/in 6 months from the signing thereof. Respondent was able to make down payment of P1, 060.000.00 and that the defendants failed to complete the construction of, as well as deliver to respondent the townhouse w/in six months from the signing of contract. Moreover, respondent was not informed the defendants at the time of the perfection of their contract that the subject townhouse was already mortgaged to LBP, it was then foreclosed and eventually sold at public auction. ISSUE: Whether or not there is fraud on behalf of the Petitioner. HELD: In the light of the foregoing environmental circumstances and milieu, therefore, it appears that the defendants are guilty of fraud in dealing with the plaintiff. They performed voluntary and willful acts which prevent the normal realization of the prestation, knowing the effects which naturally and necessarily arise from such acts. Their acts import a dishonest purpose or some moral obliquity and conscious doing of a wrong. The said acts certainly give rise to liability for damages. Article 1170 of the New Civil Code of the Philippines provides expressly that those who in the performance of their obligations are guilty of fraud and those who in any manner contravene the tenor thereof are liable for damages.

ANDRE T. ALMOCERA vs JOHNNY ONG G.R. No. 170479, February 18, 2008

Case #9 TOPIC: Article 1174 FACTS:

MEGAWORLD GLOBUS ASIA, INC. vs. MILA S. TANSECO G.R. No. 181206, October 9, 2009

Megaworld and respondent Tanseco entered into a Contract to Buy and Sell a 224 square-meter condominium unit at a pre-selling project. The purchase price was to be paid by installment provided that if the construction is completed earlier, Tanseco would pay the balance within seven days from receipt of a notice of turnover. Tanseco paid all installments due leaving unpaid the balance pending delivery of the unit. Megaworld, however, failed to deliver the unit within the stipulated period three years later, Megaworld, by notice informed Tanseco that the unit was ready for inspection preparatory to delivery. Tanseco replied that in view of Megaworlds failure to deliver the unit on time, she was demanding the return of amount representing the total installment payment she had made, with interest at 12% per annum. Tanseco pointed out that none of the excepted causes of delay existed. In its Answer, Megaworld attributed the delay to the 1997 Asian financial crisis which was beyond its control; and argued that default had not set in, ISSUE: Whether or not a Financial Crisis is considered to be an excuse to delay contracts HELD: Art. 1174. Except in cases expressly specified by the law, or when it is otherwise declared by stipulation, or when the nature of the obligation requires the assumption of risk, no person shall be responsible for those events which could not be foreseen, or which, though foreseen, were inevitable. the 1997 Asian financial crisis cannot generalize to be unforeseeable and beyond the control of a business corporation. A real estate enterprise engaged in the pre-selling of condominium units is concededly a master in projections on commodities and currency movements, as well as business risks. The fluctuating movement of the Philippine peso in the foreign exchange market is an everyday occurrence, hence, not an instance of caso fortuito. Megaworlds excuse for its delay does not thus lie.

Cases # 10

Solar Harvest, Inc. vs. Davao Corrugated Carton Corporation

GR No. 176858, July 26, 2010 TOPIC: Article 1191 in conjunctio w / Article 1169

FACTS: In the 1st Quarter of 1998, Solar Harvest and Davao Corrugated entered into an unwritten agreement. Solar Harvest placed orders for customized boxes for its business of exporting bananas at USD 1.10 each. Petitioner made a full payment of USD 40,150.00. By Jan. 3, 2001 petitioner had not received any of the ordered boxes. On Feb. 19, 2001Davao Corrugated replied that as early as April 3, 1998, order/boxes are completed and Solar Harvest failed to pick them up from their warehouse within 30 days from completion as agreed upon. Respondent mentioned that petitioner even placed additional order of 24,000.00 boxes, out of which, 14,000 had already been manufactured without any advance payment from Solar Harvest. Davao Corrugated then demanded that Solar Harvest remove boxes from their warehouse, pay balance of USD 15,400.00 for the additional boxes and P132, 000 as storage fee. On August 17, 2001 Solar harvest filed complaint against Davao Corrugated for sum of money and damages claiming that the agreement was for the delivery of the boxes, which Davao Corrugated did not do. Due to Davao Corrugateds failure to deliver, Solar Harvest had to cancel the order and demanded payment and/or refund which Davao Corrugated refused to pay. ISSUE: Whether or not Davao Corrugated was responsible for breach of contract as Solar Harvest had not yet demanded from it the delivery of the boxes?

HELD: respondent would not be liable for breach of contract as petitioner had not yet demanded from it the delivery of the boxes.Furthermore, the claim for reimbursement is actually one for rescission or resolution of contract under Article 1191 of the Civ. Code. The right to rescind contracts arises once the party defaults in the performance of his obligation. Article 1191 should be taken in conjunction with Article 1169: Those obliged to deliver or to do something in delay from the time the obligee judicially or extra judicially demands form them the fulfillment of their obligation. However the demand from creditor shall not be necessary in order that delay may exist.: 1. When the obligation or the law expressly so declares, or 2. When from the nature and the circumstance of the obligation it appears that the designation of the time when the thing is to be delivered or the service is to be rendered was a controlling motive for the establishment of the contract.

Case # 11 TOPIC: Articles 1191 and 1192 FACTS:

Cental Bank vs. Court of Appeal 139 SCRA 46

Island Savings Bank (ISB) approved the loan application for P80,000 of Sulpicio Tolentino, who, as a security for the loan, also executed a real estate mortgag eover his 100-ha land. The approved loan repayable in semi-annual installments for a period of 3 years, with 12% interest. May 22, 1965 a mere P17,000 partial release of the loan was made by ISB, and Tolentino and his wife Edita signed a promissory note. After being informed by ISB that there was no fund yet available for the release of the P63, 000 balance. Monetary Board of the Central Bank issued Resolution No. 1049, which prohibited ISB from making new loans and investments, after finding that it was suffering liquidity problems. Aug. 1, 1968 ISB, in view of non-payment of the P17,000 covered by the promissory note, filed an application for the extra-judicial foreclosure of the real estate mortgage covering the 100-ha land. ISSUE: WON Tolentino is liable to pay the P17,000 debt covered by the promissory note. HELD: YES. The bank was deemed to have complied with its reciprocal obligation to furnish a P17,000 loan. The promissory note gave rise to Tolentinos reciprocal obligation to pay such loan when it falls due and his failure to pay the overdue amortizations under the promissory note made him a party in default, hence not entitled to rescission (Art. 1191,CC). ISB has the right to rescind the promissory note, being the aggrieved party. Since both parties were in default in the performance of their reciprocal obligations, both are liable for damages. Incase both parties have committed a breach of their reciprocal obligations; the liability of the first infractor shall be equitably tempered by the courts (Art. 1192, CC).

Case # 12 TOPIC: Article 1170 FACTS:

Saludaga V.S. Far Eastern University 553 SCRA 741

It is the obligation of any college institution to provide a safe and secure environment for every student. Far Eastern University failed to comply with their obligation when a student of theirs, whose name is Joseph Saludaga was shot inside the campus by their security guard named Alejandro Rosete. The victim petitioned a case a gainst FEU and Edilberto C. De Jesus, president of FEU. The University also failed to check the qualifications of the security guards hired through Galaxy, the third party which hires security guards for the university. From there, there are also complaints for Galaxy being the firste mployers of Rosete. It is also said that the safety of the university should not only be within the hands of the security guards. Damages are taken by Saludaga by surprised including physical and moral damages obtained from the said accidental shooting by Rosete who claimed that it was an accident. Issues: Whether Far Eastern University failed to comply with their obligation in implementing a safe and secure learning environment HELD: Article 1170 of the Civil Code provides that those who are negligent in the performance of their obligations are liable for damages. Accordingly, for breach of contract due to negligence in providing a safe learning environment, respondent FEU is liable to petitioner for damages. It is essential in the award of damages that the claimant must have satisfactorily proven during the trial the existence of the factual basis of the damages and its causal connection to defendant's acts. FEU was ordered to pay actual damage of interest per annum from the filing of the case until the finality of decision. Moral damage, attorneys fees and litigation expense for Galaxy was and its presidents were ordered to jointly and severely pay the respondent FEU damages equivalent to the amount awarded to Saludaga.

Case # 13 Meralco vs. Ramoy G.R No 158911 March 4 2008

TOPIC: Article 1170 and 1173 FACTS:

On June 20, 1990 NPC wrote Meralco requesting for the "immediate disconnection of electric power supply to all residential and commercial establishments beneath the NPC transmission lines along Baesa, Quezon City. Meralco decided to comply with NPC's request and thereupon issued notices of disconnection to all establishments. Thereafter, a joint survey was conducted and the NPC personnel pointed out the electric meters to be disconnected. In due time, the electric service connection of the plaintiffs was disconnected. Ramoy testified that he and his wife are the registered owners of a parcel of land covered. When the Meralco employees were disconnecting plaintiffs' power connection, Ramoy objected by informing the Meralco foreman that his property was outside the NPC property. However, he was threatened and told not to interfere by the armed men who accompanied the Meralco employees. After the electric power in Ramoy's apartment was cut off, the plaintiffs-lessees left the premises. During the ocular inspection by court ordered it was found out that the residence of plaintiffs-spouses Ramoy was indeed outside the NPC property. ISSUE: Whether or not MERALCO is liable for damages HELD: Article 1170, those who in the performance of their obligations are guilty of fraud, negligence, or delay, and those who in any manner contravene the tenor thereof, are liable for damages. Article 1173 also provides that the fault or negligence of the obligor consists in the omission of that diligence which is required by the nature of the obligation and corresponds with the circumstances of the persons, of the time and of the place. That, "as a public utility, MERALCO has the obligation to discharge its functions with utmost care and diligence. Being a public utility vested with vital public interest, MERALCO is impressed with certain obligations towards its customers and any omission on its part to perform such duties would be prejudicial to its interest. For in the final analysis, the bottom line is that those who do not exercise such prudence in the discharge of their duties shall be made to bear the consequences of such oversight. This being so, MERALCO is liable for damages under Article 1170 of the Civil Code

CASE #14 TANGULIG vs. COURT OF APEAL 266 SCRA 78 (1997)

CASE # 15 JUAN F. NAPKIL ANS SON vs. COURT OF APPEAL 144 SCRA 596 (1986)

CASE # 16 ACE AGRO vs. COURT OF APPEAL 17266 SCRA 429

CASE # 17 MONDRAGON LEISURE vs. COURT OF APPEAL

CASE # 18 DE LEON vs. ONG February 2 2010

Case # 19 MILA A. REYES vs VICTORIA T. TUPARAN G.R. No. 188064, June 01 2011

TOPIC: Article 1458 FACTS:

On September 10, 1992, Mila A. Reyes (petitioner) filed a complaint for Rescission of Contract with Damages against Victoria T. Tuparan (respondent). In her Complaint, petitioner alleged, among others, that she was the registered owner of a 1,274 square meter residential and commercial lot located in Karuhatan, Valenzuela City and that; in December 1989, respondent leased from petitioner a space on the ground floor of the RBJ Building for her pawnshop business for a monthly rental of 4,000.00. A close friendship developed between the two which led to the respondent investing thousands of p esos in petitioners financing/lending business from February 7- MAY 27, 1990 , with interest at the rate of 6% a month; that on June 20, 1988, petitioner mortgaged the subject real properties to the (FSL Bank). Petitioner then decided to sell her real properties for at least 6,500,000.00 so she could liquidate her bank loan and finance her businesses. As a gesture of friendship, respondent verbally offered to conditionally buy petitioners real properties for 4,200,000.00 payable on installment basis without interest and to assume the bank loan.The respondent counters that the subject Deed of Conditional Sale with Assumption of Mortgage entered into between the parties is a contract to sell and not a contract of sale because the title of the subject properties still remains with the petitioner as she failed to pay the installment payments in accordance with their agreement. ISSUE: Whether or not the contract executed by petitioner and respondent is a contract to sell or a contract of sale. HELD: the subject Deed of Conditional Sale with Assumption of Mortgage entered into by and among the two parties and FSL Bank on November 26, 1990 is a contract to sell and not a contract of sale. A contract of sale is defined in Article 1458 of the Civil Code, thus: Art. 1458. By the contract of sale, one of the contracting parties obligates himself to transfer the ownership of and to deliver a determinate thing, and the other to pay therefore a price certain in money or its equivalent.Sale, by its very nature, is a consensual contract because it is perfected by mere consent. In a contract to sell, the prospective seller explicitly reserves the transfer of title to the prospective buyer, meaning, the prospective seller does not as yet agree or consent to transfer ownership of the property subject of the contract to sell until the happening of an event, which for present purposes shall take as the full payment of the purchase price. the full payment of the purchase price partakes of a suspensive condition, the non-fulfillment of which prevents the obligation to sell from arising and, thus, ownership is retained by the prospective seller without further remedies by the prospective buyer.

CASE # 20

GREAT ASIAN vs. COURT OF APEEAL GR. NO. 105774, April 25 2011

CASE # 21

DUCUSIN vs. COURT OF APPEAL 122 SCRA 280, (1983)

CASE # 22

MILLARE vs. HERNANDO 151 SCRA 484 (1987)

CASE # 23

SBTC VS. COURT OF APPEAL 249 SCRA 206, (1995)

CASE # 24

RUSTAN vs. INTERMEDIATE APPALLTE COURT 214 SCRA665 (1992)

CASE # 25

UP VS. DELOS ANGELES 35 SCRA 102 (1970)

CASE # 26

TAN vs. COURT OF APPEAL 175 SCRA 659 (1989)

CASE # 27

CO vs. COURT OF APPEAL 312 SCRA 528 (1999)

CASE # 28

PALAY vs. CLAVE September 21 1983

CASE # 29

SURIA vs. INTERMEDIATE APPALLTE COURT 151 SCRA 661(1987)

CASE # 30

CHUA vs. VICTORIO May 18, 2004

CASE #31

UY vs. COURT OF APEAL 213 SCRA 69

CASE # 32

PRYCE CORPORATION vs. PAGCOR May 6 2005

CASE # 33

ROXAX vs. ALCANTARA 113 SCRA 21

CASE #34

MACASAET vs. MACASAET September 30 2004

CASE #35

SOLID HOME vs. TAN July 29 2005

Case # 36

MARSMAN DRYSDALE LAND, INC., Vs. PHILIPPINE GEOANALYTICS, INC. AND GOTESCO PROPERTIES, INC., G.R. No. 183374, June 29, 2010 TOPIC: Articles 1207 and 1208 FACTS: Marsman Drysdale Land, Inc. and Gotesco Properties, entered into a Joint Venture Agreement (JVA) for the construction and development of an office building on a land owned by Marsman Drysdale in Makati City. It is the desire of the Parties herein to implement this Agreement by investing in the PROJECT on (50%) basis. [Marsman Drysdale] shall contribute the Property. The total appraised value of the Property is(P420,000,000.00).[Gotesco] shall contribute the amount (P420,000,000.00) in cash. The joint venture engaged the services of (PGI) to provide subsurface soil exploration, laboratory testing, seismic study and geotechnical engineering for the project. PGI, was, however, able to drill only four of five boreholes needed to its conduct. PGI then billed the joint venture for P284,553.50 representing the cost of partial subsurface soil exploration; and P250,800 representing the cost of the completed seismic study. Despite repeated demands from PGI, the joint venture failed to pay its obligations. PGI subsequently filed on complaint for collection of sum of money and damages against Marsman Drysdale and Gotesco. ISSUE: Which between joint venturers Marsman Drysdale and Gotesco bears the liability to pay PGI its unpaid claims. HELD: Art. 1207. The concurrence of two or more creditors or of two or more debtors in one and the same obligation does not imply that each one of the former has a right to demand, or that each one of the latter is bound to render, entire compliance with the prestations. There is a solidary liability only when the obligation expressly so states, or when the law or nature of the obligation requires solidarity. Art. 1208. If from the law, or the nature or the wording of the obligations to which the preceding article refers the contrary does not appear, the credit or debt shall be presumed to be divided into as many equal shares as there are creditors or debtors, the credits or debts being considered distinct from one another, subject to the Rules of Court governing the multiplicity of suits. PGI executed a technical service contract with the joint venture and was never a party to the JVA. While the JVA clearly spelled out, inter alia, the capital contributions of Marsman Drysdale (land) and Gotesco (cash) as well as the funding and financing mechanism for the

project, the same cannot be used to defeat the lawful claim of PGI against the two joint venturerspartners.Marsman Drysdale and Gotesco therefore, were jointly liable to PGI. Case # 37 EUSEBIO GONZALES vs. PHILIPPINE COMMERCIAL AND INTERNATIONAL BANK, EDNA OCAMPO G.R. No. 180257 TOPIC: Article 1207 FACTS: Petitioner Eusebio Gonzales was a client of PCIB for a good 15 years before he filed the instant case. In October 30, 1995, Gonzales and his wife obtained a loan for PhP 500,000. Subsequently, on December 26, 1995 and January 3, 1999, the spouses Panlilio and Gonzales obtained two additional loans from PCIB in the amounts of PhP 1,000,000 and PhP 300,000, respectively. These three loans amounting to PhP 1,800,000 were covered by three promissory notes. To secure the loans, a real estate mortgage (REM) over a parcel of land was executed by Gonzales and the spouses Panlilio. Notably, the promissory notes specified, among others, the solidary liability of Gonzales and the spouses Panlilio for the payment of the loans. However, it was the spouses Panlilio who received the loan proceeds of PhP 1,800,000. The monthly interest dues of the loans were paid by the spouses Panlilio through the automatic debiting of their account with PCIB. But the spouses Panlilio, from the month of July 1998, defaulted in the payment of the periodic interest dues from their PCIB account which apparently was not maintained with enough deposits. PCIB allegedly called the attention of Gonzales regarding the July 1998 defaults and the subsequent accumulating periodic interest dues which were left still left unpaid. ISSUE: Whether or not that the liability arising from PROMISSORY NOTES pertained to borrower PANLILIO Spouse and not appellant as recognized and acknowledge by PCIB HELD: A close perusal of the records shows that the courts a quo correctly found Gonzales solidarily liable with the spouses Panlilio for the three promissory notes. Gonzales admitted that he merely accommodated the spouses Panlilio at the suggestion of Ocampo, who was then handling his accounts, in order to facilitate the fast release of the loan. Solidary liability cannot be presumed but must be established by law or contract. Article 1207 of the Civil Code pertinently states that there is solidary liability only when the obligation expressly so states, or when the obligation requires solidarity. This is true in the instant case where Gonzales, as accommodation party, is immediately, equally, and absolutely bound with the spouses Panlilio on the promissory notes which indubitably stipulated solidary liability for all the borrowers. promissory notes serve as the contract between the parties. Moreover, the three

CASE # 38 TOPIC: Article 1216 FACTS:

Philippine National Bank vs. Independent Planters Association Inc. G. R No. L-28046, May 16 1983

The Philippine National Bank filed a complaint againts its solidary debtors for the collection of some of money, but the CFI of manila dismissed the collection case on the ground that one of the defendant which is one of the solidary debtor died during the pendency of the case. ISSUE: Whether or not the death of one of the solidary debtor would lead to the dismissal of the case HELD. If one of the alleged solidary debtor dies during the pendency of the collection case, the cort where said case is pending retains jurisdiction to continue hearing the charge as against the surving defendants. Article 1216 provided that the creditor may proceds against any of the solidary debtor or some or all of them simoltaneously. The demand made against any one of them shall not be an obstacleto those which may subsequently be directed the others so long as the debt has not been fully collected. The above quoted Article grants the creditor the substantive right to seek satisfaction of his credit from one, some or all of his solidary debtors, as he deem fit or convinient for the protection of his interests. And if, after instituting a collection suit base on contract against some or all of them, and during its pendency one of the defendant dies the courtretains jurisdiction proceeding and decide the case in respect of the surviving defendants to continue the

CASE # 39 TOPIC: Article

RUBIO vs. COURT OF APPEAL 153 SCRA 183

CASE # 40 Filinvest vs. CA G.R. No. 138980, September 20, 2005 Topic: Article 1229, New Civil Code FACTS: Petitioner awarded to respondent Pacific Equipment Corp (Pecorp) development of its residential subdivisions, a contract amounting to P12,470,000.00. Pecorp posted two surety bonds to guarantee faithful compliance. Both agreed that liquidated damages of P15,000/day shall be paid by Pecorp in case of delay. Petitioner claimed that Pecorp failed to complete the works (94.53%) and claims for damages. Pecorp on the other hand contended that their work stopped due to failure of petitioner to pay for certain completed portion. RTC assigned a commissioner to evaluate the claims and counter-claims. The total amount due to Pecorp was computed to be P1,881,867.66. Petitioner claimed that liquidated damages amounted to P3,990,000.00 Both claims and counterclaims were dismissed. Court of Appeals affirmed the ruling of RTC.

ISSUE:Whether or not the penalty (liquidated damages) of P15,000.00 per day of delay shall be binding upon mutual agreement of parties. RULING: No. As a general rule, courts are not at liberty to ignore the freedom of the parties to agree on such terms and conditions as they see fit as long as they are not contrary to law, morals, good customs, public order or public policy. The judge shall equitably reduce the penalty when the principal obligation has been partly or irregularly complied with by the debtor. Even if there has been no performance, the penalty may also be reduced by the courts if it is iniquitous or unconscionable (Art.1229, NCC). A penalty interest of P15,000.00 per day of delay as liquidated damages or P3,990,000.00 (representing 32% penalty of the P12,470,000.00 contract price) is unconscionable considering that the construction was already not far from completion.